China, world leader in electric cars



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Thanks to government subsidies and mandatory production quotas, China has become the world leader in electric cars, whose manufacturers now aspire to conquer the rest of the world.

Electric vehicles, including SUVs and saloons, are the stars of the Shanghai Motor Show today, with models from GM, Nissan, Ford or Renault.

In the huge Chinese market, electric and hybrid cars make up only 4%, but their sales soared 62% in 2018 to 1.3 million units, well above the other segments of this market.

Foreign groups in China have also launched in this market, such as Renault, which has just arrived in the country. "It is the segment in peak," says the president of the French company, Thierry Bolloré.

"In the electric vehicle, you first have to succeed in China, this country is a leader in terms of regulation," says Stephan Wöllenstein, president of Volkswagen China.

China accounts for half (56%) of global sales of electric cars and the segment is 90% monopolized by local brands such as BYD leader or state giants SAIC and BAIC.

"Foreign brands have not been very successful, perhaps we know better the expectations of the consumers and technologically we have been prepared from the beginning", with the hiring of foreign engineers, explains Li Yunfei, deputy director general of BYD, to AFP.

With 227,000 electric vehicles sold last year, BYD is number one in the world in the industry.

"The Chinese started faster," but without state aid that would not have been possible, says Laurent Petizon, a specialist at AlixPartners.

The Chinese government has for years granted tax-free advantages to clean vehicle buyers, with the effect of boosting sales and favoring supply, with several dozen manufacturers.

To the extent that in March the government announced the reduction of this half of the subsidy and that it will be abolished next year to boost competitiveness and innovation.

BYD is in favor of this measure. "The last time the rules were hardened in 2015, incompetent people who abused subsidies were left out, this time it's about favoring the best products and the best technologies," Li says.

– For the conquest of the world –

Even without tax advantages, foreign builders bet on electric vehicles.

"There are many non-fiscal stimuli, facilities for getting records in big cities," says Hubertus Troska, Daimler's China director.

In addition, the industry has no other option because Beijing has imposed significant production quotas for electric cars for all manufacturers since this year.

Under pressure, foreign manufacturers are creating subsidiaries dedicated to these cars to improve their offer.

This is the case of American Tesla, which is building a factory near Shanghai, but will have to compete with top-level local rivals such as Nio.

Chinese groups now point to the international market.

Unlike thermal motors, which require a complex approval process in the United States and Europe, electric "remove this barrier of entry," says Xavier Mosquet, a consulting expert at BCG.

"Some people consider a" Chinese Trojan "to enter Western markets," says Petizon.

The BAIC and GAC state groups were already present at the last car fairs in Paris and Detroit and BYD already manufactures and markets electric buses in the United States and Europe.

The Chinese start-up Aiways, founded in 2017, plans to market an electric and connected SUV produced in China in 2020 with the cooperation of Germany.

Lynk & Co, another start-up of the Chinese group Geely, has sold its premium connected models since 2017 to the Asian giant, which will be available next year in the Netherlands.

In this case, however, "we will not sell the cars, they can be driven in exchange for a monthly subscription, such as a" Netflix "car," says its director, Alain Visser.

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